When regulatory enforcement softens, compliance budgets often follow. It’s a pattern that Asha Palmer, senior vice president of compliance solutions at Skillsoft, has watched play out across organizations.
“There’s always a coordination between enforcement and compliance,” Palmer says. “We tend to see greater implementation of compliance in organizations and more scrutiny around compliance efforts, more money put into it when enforcement is high. And we see the opposite when it’s not.”
Palmer is looking at enforcement through the lens most corporate leaders use: the high‑profile actions that come out of agencies like the SEC and DOJ.
Those signals have shifted under the current administration, according to Harvard Law School Forum on Corporate Governance, with overall securities and corporate enforcement activity falling from recent highs. At the same time, federal rhetoric has leaned more heavily toward deregulation and pro‑innovation stances, especially in areas like tech and AI.
This matters for budgets, according to data from PwC; regulatory enforcement and regulatory change are the top two triggers for compliance investment. This may mean that when executives perceive those signals as softer, they often act as if the risk landscape has eased, even if that’s only true in certain corners of the system.
Quality tradeoffs
Meanwhile, reskilling initiatives, technology investments and general belt-tightening are forcing leaders to make hard choices about how limited resources are allocated. Compliance, without an active external threat knocking at the door, can struggle to make its case.
The result, Palmer says, is that some organizations may make quality tradeoffs they’d never consider in a higher-enforcement environment. It could be tempting to replace robust programs with cheaper, lower-quality alternatives because the budget math demands it.
PwC’s 2025 Global Compliance Survey, which surveyed 1,802 executives across 63 territories, puts data behind what Palmer is describing. The report found that 77% of respondents said their company had been negatively impacted by compliance complexity across areas that drive growth, and that resource capacity ranked among the top factors making effective compliance more challenging.
Nearly 90% reported their breadth of compliance responsibilities has increased over the last three years, even as many cite resource capacity as a growing constraint.
Compliance around tech risks
HR functions face particular exposure from the spread of unsanctioned AI tools. An employee feeding sensitive data into a public AI platform without knowing where it goes or how it’s used creates real exposure in any regulatory environment.
Cyber threats compound the picture. PwC found that cybersecurity and data privacy ranked as the top compliance priorities for more than half of all respondents. Those threats operate independently of whether regulators are actively watching. Palmer echoes this, noting that cyber risk is “top of mind” among her customers.
The cross-functional case becomes harder to ignore here. Palmer has been encouraging customers to consolidate compliance, HR and IT efforts, not just because it’s good practice but because it’s one of the ways organizations can maintain program quality under budget constraints.
Coordinated compliance structures
PwC found that companies that improved coordination across compliance functions reported greater confidence in decision-making, increased transparency and improved compliance culture.
Among companies with centralized or well-aligned compliance structures, 59% report greater confidence in compliance-related decision-making, 58% see increased transparency and visibility of compliance matters, and 56% note stronger compliance awareness and culture across management and employees.
The organizations that sustain their compliance programs through low-enforcement cycles tend to be better positioned when conditions shift. As Palmer says, “We should be more vigilant about it.”
Credit: Source link
